The International Air Transport Association (IATA) released data today indicating that demand, measured in freight tonne kilometers (FTKs), decreased by 3.4% y-o-y in May. The analysis, which shows a slight improvement from the 5.6% dip in April, confirms previous Air Cargo World reports on May traffic.
Freight capacity growth, which rose 1.3% y-o-y in May, continued to exceed growth in demand for the 13th month in a row. IATA pointed out that seasonally adjusted, May brought the third consecutive increase in FTK levels, which, viewed optimistically, could indicate that the worst market contractions are over.
The decline in demand, however, indicated continued weakness in the air cargo market – despite a slight 0.1% increase in world trade over the past year and signs that the U.S.-China trade tensions could be easing. The fall is “evidence of the economic damage that is done when barriers to trade are erected,” Alexandre de Juniac, IATA’s director general and CEO, said.
Relations thawed somewhat at the recent G20 summit talks, and at the end of June, the U.S. cancelled a planned 25% tariff on an addition $300 billion of Chinese goods. Though these efforts are welcome, they won’t immediately restore business confidence or grow trade, de Juniac pointed out. “We can expect the tough business environment for air cargo to continue,” he added.
IATA credits the trade war for May drops in freight volumes in Asia-Pacific and the Middle East. Airlines in the Asia-Pacific region saw freight demand drop 6.4% y-o-y and freight capacity increase 0.3% over the past year. The Middle East saw demand drop 6.9% y-o-y and capacity fall 1.6%.
North America and Europe also saw declines, although less severe. North American airlines saw demand drop by 1.6% y-o-y in May, and capacity increase 1.4% over the past year. IATA also attributed this to the U.S.-China trade war, noting that international FTKs between Asia and North America have fallen almost 8% y-o-y.
European airlines saw a 0.2% decrease in freight demand y-o-y, which is a stark contrast from the 6.9% decrease in April. Capacity increased 2.5% y-o-y. IATA said that weaker manufacturing conditions for exporters in Germany, regional economic slowing and continued confusion over Brexit influenced Europe’s industry performance.
Africa saw the strongest performance for the third month in a row, with airfreight demand increasing 8.0% y-o-y, continuing an upwards trend that became evident in mid-2018. Capacity grew 13.4% y-o-y. IATA attributed the region’s growth to double-digit increases in airfreight volumes between Asia and Africa over the past year.
Latin American airlines also saw growth, with a 2.7% y-o-y increase in freight demand in May. Capacity increased by 6.6%.